The conglomerate's quarterly performance was anchored by an oil-to-chemicals segment that offset softness in retail core growth and EBITDA caused by shifting festive periods and quick commerce competition. Major brokerages maintained buy recommendations based on favorable crude basket costs, strong fuel cracks, and higher refinery throughput. Additionally, the company's net debt declined 1% year-on-year to Rs 1.17 lakh crore as it launched initial operations in solar modules and cells.
Key points
Global supply disruptions in Russia and the Middle East are expected to keep refining mar…: Global supply disruptions in Russia and the Middle East are expected to keep refining margins elevated through the winter months.
Long-term revenue streams are slated to expand as initial solar cell and module operation…: Long-term revenue streams are slated to expand as initial solar cell and module operations begin contributing to earnings in FY28.
Persistent margin pressure in the retail business driven by expanding quick commerce rema…: Persistent margin pressure in the retail business driven by expanding quick commerce remains a downside risk against industrial segment strength.
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Revenue from operations increased 29% YoY to Rs 3.32 lakh crore from Rs 2.58 lakh crore in the corresponding quarter last year. The oil-to-chemicals (O2C) segment was the biggest contributor to earnings growth, with EBITDA surging 68% YoY to a record Rs 25,203 crore from Rs 15,008 crore.
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Jefferies has maintained its Buy rating on the stock, with a target price of Rs 1,710, implying a potential upside of 47%. The brokerage said strong performance in the O2C segment helped consolidated EBITDA beat its estimates by 6%, offsetting a 6% miss in Retail. Core Retail growth and EBITDA declined YoY due to a shift in the festive calendar and the continued impact of quick commerce (QC) expansion.
Jefferies expects O2C profitability to remain elevated through the winter, supported by damage to refining infrastructure in the Middle East and Russia. The brokerage has raised its FY27 and FY28 EBITDA estimates by 6% and 2%, respectively. It noted that the stock is trading more than 2 standard…
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